I still think autonomous cars will create more billionaires in real estate and retail than in tech or manufacturing. Just as cars did.
— Benedict Evans (@BenedictEvans) August 29, 2016
Autonomous cars will be pervasive in the next 5-10 years. They will be safer and more efficient than human drivers and they’ll all be electronic.
There’s no doubt autonomous cars are coming soon and the impact on the real estate industry will be massive. However, very few in the real estate industry is talking about it and even less are preparing for the impact it could have on their business.
Over the past several weeks, I’ve been chatting in a private forum with a few real estate buddies about the impact autonomous cars could have on the real estate industry.
The post that follows is a collection of our thoughts/questions on how autonomous cars will impact the real estate industry and what real estate professionals should be thinking about.
- Street parking will go away, adding more space for pedestrians or other uses. Parking lots and structures will be moved to areas where land is cheaper.
- Parking requirements will go away, bringing down the cost of construction and increasing affordability.
- “Reports estimate self-driving vehicles have the potential to reduce parking space by about 61 billion square feet.”
- Self-driving cars will need to nest somewhere, likely large parking garages in low-cost areas.
Housing Decisions / Suburbs
- It’ll change where people choose to live since ‘access to public transit’ is everywhere. The easier access will shift residential value from properties in urban centers to those in suburban areas.
- People will be ok taking longer commutes and go out in bad weather.
- Big box retail, which is based on the arbitrage of land costs, transport cost, and people’s willingness to drive and park, will go away.
- How does urban retail change if there are no cars parked on the street out front? Wider sidewalks, landscaping, retail seating etc.
- Mall parking lots can be used for additional retail and restaurant development or even residential uses.
- Grocers could use their stores as distribution centers for home delivery.
- Parking garages integrated in large CBD offices will go unused.
- Reduced demand for suburban office, but the design impact is less severe; suburban office parks will become denser and buildings will be placed closer to the road and one another.
- Garden style apartment communities can use the parking space to add more units or new amenities.
- Converting integrated parking within mid-rise and high-rise apartments is more difficult.
- The need for lodging could drop as people sleep in their cars during overnight road trips.
- “Audi’s vice president of brand strategy and digital business, predicted that car interiors will eventually be able to morph between driving mode and sleeping mode, presenting a major obstacle for the hotel industry.”
- Select and limited service hotels can develop more rooms on the existing parking areas.
- Industrial nodes will be reliant on centrality due to the removal of maximum trucker times for distribution. However, access to labor is still important (but, as noted earlier, people may change where they choose to live).
- Autonomous trucks could deliver products directly to the end user, eliminating the industrial ‘hub & spoke’ network.
- Most of the 150k gas stations in the USA will go away.
- With no accidents, most collision repair shops will go away.
- Reduce the demand for public transit. Does the premium of being located next to transportation hub go away?
- Could residential parking garages be converted to self-storage?
- Home garages can be converted to storage, home offices, spare bedrooms etc.
- Entryways to high-rise residential buildings will need to be redesigned to accommodate high-volume pick-up.
It’s fascinating discussion and one that I think real estate professionals need to spend more time thinking about.
“Just as it was easy to predict mass car ownership, but hard to predict Wal-mart, it’s easy to see self-driving cars are coming, but hard to predict what the impact will be on real estate.”
Benedict Evans, A16Z
What do you think the impact of autonomous cars will be on the real estate industry?
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